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Hey everybody,

We would love to hear your feedback and any suggestions you may have for our new VWVortex store.

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You need a bigger vehicle, so it's good that you're getting what you need for your family. That said, you have some rose-colored glasses on about leases and "never financing a vehicle again!" Your negative equity from the GTI and then the Outback has come from not being able to keep a vehicle for four years.

What are you going to do 2.5 years from now when the Ody no longer suits you? A lease takeover isn't any more fun than selling a car with negative equity.

You asked for Financial Lounge advice, and the nuts and bolts is they would want you to pay down the Outback more and sell/trade it for a used ~2009 or even older Odyssey of a similar price to the Subaru. The root of your issues with never having equity in your cars is new vs. used, not finance vs. lease.

good luck with everything, the odyssey is an amazing car. i just helped my father-in-law buy 2 of them. we just bought a red ex-l in florida for 31k and a smoky topaz touring in nj for 36k if that helps any with your prices

I agree with barry2952 about leasing and that Ive never understood why people do it over purchasing. The dealership is making out on the front end and in most cases on the back end when the car is turned in. You could almost say 3 ways becasue they will sell the turned in car. Granted I have really only known two types of people that lease. First type is the person that wants a car they truly cant afford and leasing gives them the flexablity to move into the car at a much lower monthly. The second type I know is the person that literally flips a car every 2 or 3 years and would be upside down in a payment situation and the lease gives them the flexability to get out of the car. Either way, hope everything works out for you and your family.

I also don't believe that any mods to the car, reversible or not, are acceptable at turn-in time. I really don't understand mods, either, past wheels and tires, but that another whole discussion. I especially don't understand modifying a car you don't own.

My wife and I discussed this last night. Her sister is the ideal candidate for leasing. She doesn't have the money for a downstroke and doesn't want to risk out of warranty repair costs. We explained that she'd be better off owning the car, but she can't put 25%, or more, into a down payment.

I, personally, never finance for more than 6 months. That gives me time to liquidate something to pay off the balance. I could easily tap my home credit line, but that doesn't help my credit history. Lenders want to see activity, in addition to solvency.

I guess I do understand why some people lease. What I don't understand is; as good as todays cars are, why aren't people keeping them longer. I grew up in the '50s in a house where my father was in the advertising business. He felt it necessary to show his clients that he was successful, but not too successful. He bought a new car every two years. His cars did get cooler and more expensive as time went on. He had a '64 Wildcat convertible followed by a '66 225 ragtop and then a '68 Toronado followed by his black '70 Lincoln Town Car.

The only car I ever flipped was my 528e. It was so slow that it couldn't get out of its own way. I traded it after 8 months on a 533i, which I put 100,000 miles on, as I have on every subsequent vehicle. My DD '98 ML-320 has 182,000 on it. Yes, I'm paying for ongoing repairs, but nowhere near what it would cost to replace it.

I guess I did flip cars once before. I'm sure I've told this story. My banker called me in 1980, I think, offering the inventory of a Porsche repair facility that specialized in 356s. They had pulled out 10 cars into the field behind the padlocked store. I bought all 10 cars for $1,000 and flipped them to a foreign car pick and pull the next day for $2,000. There were a couple of Speedsters, mostly Coupes and a few Cabrios.

I sure thought I was smart, doubling my money in a day. Around 1990 I started kicking myself and bashing my head against the wall, and it hasn't stopped.

You need a bigger vehicle, so it's good that you're getting what you need for your family. That said, you have some rose-colored glasses on about leases and "never financing a vehicle again!" Your negative equity from the GTI and then the Outback has come from not being able to keep a vehicle for four years.

What are you going to do 2.5 years from now when the Ody no longer suits you? A lease takeover isn't any more fun than selling a car with negative equity.

You asked for Financial Lounge advice, and the nuts and bolts is they would want you to pay down the Outback more and sell/trade it for a used ~2009 or even older Odyssey of a similar price to the Subaru. The root of your issues with never having equity in your cars is new vs. used, not finance vs. lease.

I sincerely appreciate TFL's advice. I think we may pay down the negative equity and retain the $366/month the negative equity is about $2600.00

Incorrect. You can easily sell a car you're financing and get a new one. It's nearly impossible to break a lease unless you want to line their pockets with your money.

As far as ownership goes, you still own the car, even if making payments. The bank has a lien on it, but you are free to dispose of it if you want to. You own nothing if you lease.

Companies lease for profit, at your expense. You are paying for depreciation and mileage up-front. That's what makes no sense.

You can sell your car if you are leasing as well. There is always a pay off on the vehicle, and every month you are buying down that pay off just like a finance. And just like a finance, the bank owns the car.

Companies lease and finance for profit. In a lease you are simply paying for the depreciation of the vehicle (the portion you use). You aren't paying up front, you are paying over 3 years. The vehicle is going to depreciate more in the first year then you have paid for it. But it's a curve and your break even point is typically going to occur right around the time your lease matures, at which point you can extend your lease, purchase the car, or give it back.

You finance a car for 5 years and trade it after 3, you will still have negative equity unless you put. Large sum of money down. With a lease, you don't have that issue. The bank assumes the risk. If its worth more then the residual, great for them. If it is worth less then the residual...that's a risk they took and they were on the losing end. Most people trade every few years, leasing costs less then buying and trading. You also always have the latest in technology, safety, and a reliable car that won't break down, as well as one that will require minimal maintenance as you are always driving a late model car.

Leasing may not be for you, but it works for many people. I have purchased cars outright, financed cars as well as leased cars. And you can most def" get out of a lease early. There are a few ways to do it. Trade, sell, or have someone else assume your lease......which my friend just did with his BMW.

No, not at all. The vehicle is leased. It belongs to Honda. As bad as this sounds, it would actually work in your favor if the car is not recovered. Insurance will pay it off, most leases include gap insurance as well. I know Honda leases do. So you are off the hook. Now you can lease a new oddy and your payment will be much lower as you no longer have negative equity being rolled in.

For some it is to drive a car they can't really afford. For some, it's a way to have an exit strategy because they flip through cars every few years (need to appear successful, etc). For some, they get bored easily, and want to drive different things.

Or, in my case, I leased my LEAF because the lease payment is less than the money I spend on gas commuting in my 540i, and I charge for free. Kinda hard to pass on a free car.

You can sell your car if you are leasing as well. There is always a pay off on the vehicle, and every month you are buying down that pay off just like a finance. And just like a finance, the bank owns the car.

A lien is not ownership. You own a financed car, but the bank has a legal claim against the property.

No, not at all. The vehicle is leased. It belongs to Honda. As bad as this sounds, it would actually work in your favor if the car is not recovered. Insurance will pay it off, most leases include gap insurance as well. I know Honda leases do. So you are off the hook. Now you can lease a new oddy and your payment will be much lower as you no longer have negative equity being rolled in.

Exactly! Thank you guys. It's been a process. In order to buy a car from Massachusetts and bring it to New York is a nightmare but in the end it's financially worth it.

A lien is not ownership. You own a financed car, but the bank has a legal claim against the property.

Yes. However......untill you make that last payment...the car isn't really yours as the bank has legal claim against it. So you can't do anything you please with it....such as export it to a foreign country permanently or temporarily for that matter.

Yes. However......untill you make that last payment...the car isn't really yours as the bank has legal claim against it. So you can't do anything you please with it....such as export it to a foreign country permanently or temporarily for that matter.

exactly.

people think that when you lease a car you don't "own" it. in all reality you do. but you only own 3 years of depreciation on it. the car is fully financed through whichever company foots the bill, at the end of the lease, they hope to recoup the remaining cost of the car (plus a profit) by reselling it as a CPO/wholesale/auction etc.

so if a car was worth $50k and it had 50% residual after 3 years, they would lease it to you for $25k + interest for 3 years, then be able to sell it for at least $25k CPO or at auction. (its not concrete but thats the general concept)

Dude, you want to pay for lojack on a car with $5000+ in negative equity? Don't do it! Believe me, the BEST thing that can hapopen is the car getting stolen or totaled. Your car gets paid off in full (with GAP) and now you can lease another replacement for $100 less per month.

No, not at all. The vehicle is leased. It belongs to Honda. As bad as this sounds, it would actually work in your favor if the car is not recovered. Insurance will pay it off, most leases include gap insurance as well. I know Honda leases do. So you are off the hook. Now you can lease a new oddy and your payment will be much lower as you no longer have negative equity being rolled in.

I posted mine before reading yours. How refreshing to see someone offering correct advice...

with the depreciation of the outback (offering me 17,000 for it and total payoff is 19600 so $19600 - $1700 = 2600) the number jumped to $461.

thats a $95.00 discrepancy x 36 months = $3420.00

he said its that high because of "tax savings" what on earth does that mean? can someone elaborate?

No idea what the "tax savings" bit is, but on the surface that's effectively 18% interest rate on the $2600 for 3 years. It seems high.

At the end of the day it's a matter of $820, and surely there should be at least some borrowing cost to them covering the $2600 shortage, but something about it sounds dirty to me. "Yeah sure, we'll cover the negative equity" and then squeezing extra money out of you.

Why wouldn't you just kick in the $2600 at the time of the deal? Jumping the payment by $100/mo for 3 years for negative equity seems really dumb.

Ideally i'd love to do that, but my millions of dollars is tied into Gold Bullion...

in all reality, our car payment is $500 a month, we'd be going into a newer vehicle with a $40.00 savings, no negative equity at the end of 3 years trading up in 2.5/3 years for $366/month versus owning an outback after 4 years (one that doesn't suit our needs)